Home 1: Stand-Alone House Home 2: Condominium Purchase Price: $198,000 Future Value: $229,000 Features: ► Two bedrooms, 1 bathroom Large fenced yard ▸ New roof installed last year ► Single-car garage ► You must drive at least 10 minutes to reach work, school, shopping, and entertainment. ► City bus stops are 10 minutes away ► Near an elementary school, a dog park, and walking trails Purchase Price: $256,000 Future Value: $390,000 Features: ► Two bedrooms, 2 bathrooms ▸ Shared garden area ► You must pay a monthly maintenance fee of $200 in addition to your regular mortgage payment. ► Covered parking is free for residents. ► The condo is located within walking distance of school, work, shopping, and entertainment areas. ▸ Sheltered city bus stop at the corner Home 3: House on the Water Purchase Price: $231,000 Future Value: $255,000 Features: ▸ One bedroom, 1.5 bathroom ► Private yard with existing garden ▸ New windows installed 3 years ago ▸ No garage ► You must drive at least 20 minutes for work, school, shopping, and entertainment ▸ Open city bus stop is 5 minutes away ► Local grocer will deliver to you for no additional charge ▸ This house has been known to flood when the water is high
Home 1: Stand-Alone House Home 2: Condominium Purchase Price: $198,000 Future Value: $229,000 Features: ► Two bedrooms, 1 bathroom Large fenced yard ▸ New roof installed last year ► Single-car garage ► You must drive at least 10 minutes to reach work, school, shopping, and entertainment. ► City bus stops are 10 minutes away ► Near an elementary school, a dog park, and walking trails Purchase Price: $256,000 Future Value: $390,000 Features: ► Two bedrooms, 2 bathrooms ▸ Shared garden area ► You must pay a monthly maintenance fee of $200 in addition to your regular mortgage payment. ► Covered parking is free for residents. ► The condo is located within walking distance of school, work, shopping, and entertainment areas. ▸ Sheltered city bus stop at the corner Home 3: House on the Water Purchase Price: $231,000 Future Value: $255,000 Features: ▸ One bedroom, 1.5 bathroom ► Private yard with existing garden ▸ New windows installed 3 years ago ▸ No garage ► You must drive at least 20 minutes for work, school, shopping, and entertainment ▸ Open city bus stop is 5 minutes away ► Local grocer will deliver to you for no additional charge ▸ This house has been known to flood when the water is high
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Calculate the appreciation rate of each home. Show your work. Then, write at least two paragraphs that discuss which home you’d like to buy, based on the rate at which it will appreciate and its features.
In paragraph 1, include each appreciation rate. Why do you think the appreciation rates are different for each home? Explain your reasoning. In paragraph 2, compare and contrast the features of the homes, based on what you would be looking for in a house. Be sure to state which home you would want to buy.
(If you buy Home 1, you think that you will own it for 3.5 years, but if you buy Home 2, you will likely own it for 7.25 years. You’re unsure how long you might stay in Home 3, but you think it would be about 4.75 years.)
Transcribed Image Text:Home 1:
Stand-Alone House
Home 2:
Condominium
Purchase Price: $198,000
Future Value: $229,000
Features:
► Two bedrooms, 1 bathroom Large fenced yard
▸ New roof installed last year
► Single-car garage
► You must drive at least 10 minutes to reach work, school, shopping, and entertainment.
► City bus stops are 10 minutes away
► Near an elementary school, a dog park, and walking trails
Purchase Price: $256,000
Future Value: $390,000
Features:
► Two bedrooms, 2 bathrooms
▸ Shared garden area
► You must pay a monthly maintenance fee of $200 in addition to your regular mortgage
payment.
► Covered parking is free for residents.
► The condo is located within walking distance of school, work, shopping, and entertainment
areas.
▸ Sheltered city bus stop at the corner
Transcribed Image Text:Home 3:
House on the Water
Purchase Price: $231,000
Future Value: $255,000
Features:
▸ One bedroom, 1.5 bathroom
► Private yard with existing garden
▸ New windows installed 3 years ago
▸ No garage
► You must drive at least 20 minutes for work, school, shopping, and entertainment
▸ Open city bus stop is 5 minutes away
► Local grocer will deliver to you for no additional charge
▸ This house has been known to flood when the water is high
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education